ACA Northern Conference 21 September 2018 RPI/CPI pensions cases: - PowerPoint PPT Presentation

ACA Northern Conference 21 September 2018 RPI/CPI pensions cases: legal update on latest case law Patrick Kennedy Partner, Gateley Plc Director, Entrust Pension Limited

Danks v QinetiQ (2012) Arcadia BT (2018) (2014) Key Cases Buckingham- British shire v Airways Barnardo’s (2017) (2015 – 2018) Thales (2017) 2

Danks v QinetiQ Holdings Ltd (2012) High Court • Index RPI “or any other suitable cost-of-living index selected by the Court of Trustees” Appeal • Section 67 PA 1995 Supreme Court 3

Danks v QinetiQ (2012) Arcadia BT (2018) (2014) Key Cases Buckingham- British shire v Airways Barnardo’s (2017) (2015 – 2018) Thales (2017) 4

Arcadia Group Ltd v Arcadia Group Pension Trust Ltd and another (2014) High • RPI “or any similar index Court satisfactory for the purposes of HMRC” • Power to select CPI? Court of • Who can exercise the Appeal power? • CPI similar and/or satisfactory? Supreme Court • Section 67 PA 1995 5

Danks v QinetiQ (2012) Arcadia BT (2018) (2014) Key Cases Buckingham- British shire v Airways Barnardo’s (2017) (2015 – 2018) Thales (2017) 6

Buckinghamshire and others v Barnardo’s and others (2015 – 2018) High • RPI “or any replacement adopted by the Trustees without prejudicing Court Approval” • Danks and Arcadia – no assistance at all. Court of • Rainy Sky “unitary exercise” Appeal • One stage X Two stage √ • Replacement ≈ ceased to be published. • No “replacement” while RPI Supreme remains an officially published Court index 7

Danks v QinetiQ (2012) Arcadia BT (2018) (2014) Key Cases Buckingham- British shire v Airways Barnardo’s (2017) (2015 – 2018) Thales (2017) 8

Thales UK Ltd v Thales Pension Trustees Ltd and others (2017) High • If RPI “is not published or its Court compilation is materially changed, the Principal Employer, with the agreement of the Trustees, will determine the nearest alternative index to be applied” Court of • “If RPI is revised to a new base or if Appeal that index is otherwise altered …subsequent variations will be on a basis determined by the Trustees having regard to the alteration made to RPI” Supreme • UKHPI – material change. Nearest Court alternative index - RPI 9

Danks v QinetiQ (2012) Arcadia BT (2018) (2014) Key Cases Buckingham- British shire v Airways Barnardo’s (2017) (2015 – 2018) Thales (2017) 10

British Airways plc v Airways Pension Scheme Trustees Ltd (2017) High • Trust Deed “may be amended or added to in any way by means of a Court supplemental deed executed by … the Management Trustees” (Clause 18) • 2011, Annual Review Order, RPI to CPI • Clause 18 exercised to amend Rule 15 (pension increases) by adding “the Court of Management Trustees may at their Appeal discretion, and shall in any event at least once in any one year period, review the annual rate of pension payable … and shall have power, following such a review, by revaluation to apply discretionary increases in addition to those set out in this Rule …” Supreme • Ultra vires - managers / administrators Court not paymasters / design. 11

Danks v QinetiQ (2012) Arcadia BT (2018) (2014) Key Cases Buckingham- British shire v Airways Barnardo’s (2017) (2015 – 2018) Thales (2017) 12

BT plc v BT Pension Scheme Trustees Ltd (2018) High • “If [RPI] ceases to be published, or is so amended as to invalidate it in the Court view of the Principal Company as a continuous basis for purposes of calculating increases, the Principal Company shall substitute such other index or appropriate basis of comparison as it shall in consultation Court of with the Trustees decide” Appeal • Lapse (Entrust case) • RPI, 1956, Carli, arithmetic, formula effect, clothing / CPI, 1996, Jevons, geometric Supreme • Objective test / risk of failing to keep Court pace with real increases in outgoings 13

Danks v QinetiQ (2012) Arcadia BT (2018) (2014) Key Cases Buckingham- British shire v Airways Barnardo’s (2017) (2015 – 2018) Thales (2017) 14

Pensions Ombudsman The Future White Paper Key Concepts Pension Increase Hard Wired Exchange Trust Powers 15

USDAW (2018) “RPI or other index considered suitable by the Trustees” Deficit / £90bn Surplus £200bn Key Concepts Member Construction Option / - unitary Liability exercise Management (Rainy Sky) Proper exercise / ultra vires 16

Questions 17

Contact Details Patrick Kennedy Partner t: +44 (0) 161 836 7788 e: Patrick.Kennedy@Gateleyplc.com 18